Which of the Following Investment Evaluation Techniques Used in Capital

question 9

Multiple Choice

Which of the following investment evaluation techniques used in capital budgeting is based on the discounted cash flow model?

• A)Accounting rate of return
• B)Internal rate of return
• C)Payback
• D)Both B and C

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Definitions:

Accounts Receivable Turnover

A financial ratio indicating how many times a company collects its average accounts receivable during a period.

Accounts Receivable

Debt that customers hold towards a business for received goods or services which remain unpaid.

Cash Sales

Transactions in which the buyer pays the seller immediately with cash or other forms of immediate payment.

Average Collection Period

The average number of days it takes for a company to receive payments owed by its customers.